Norwegian-born Fredriksen is a shipping tycoon whom Forbes described
as "King of the tanker trade." He became a Cypriot citizen in 2006 to
benefit from Cypriot tax laws even though he reportedly lives in The Old Rectory
in Chelsea in the UK, which has at least ten bedrooms, a ballroom and
gym. The Sunday Times rich list describes him as Britain's seventh
richest man.

Until 2006 Fredriksen's main holding company, Greenwich Holdings, was
based in Cyprus, and in 2006 it paid a dividend of US$ 4.5 billion. The
dividend went to a Panama-company with undisclosed owners. It has been
impossible to confirm who actually received the money.

Although Cypriot holding companies themselves incur no taxes on
dividends paid from overseas, individual Cypriot company owners are
supposed to pay some tax on dividends they receive. As a Cypriot citizen
at the time, if Fredriksen had been the recipient of that $4.5 billion,
he would have been liable to a 15% tax on the dividend. However, he did
not pay this: he told the Cyrpus tax authorities that the owner of that
Panama company was not him but another Panama company - even though he
told the U.S. Securities and Exchange Commission (SEC) a different
story: that he was the ultimate owner of the company (though
Fredriksen's folk have also rejected DN's interpretation of that).

Still, the Panama company register shows that colleagues and close
allies of Fredriksen are on the board of both Panama companies. As DN
reported it:

"According to Fredriksen he received no dividends
himself. So he paid no tax. The Dividend could have resulted in a tax
payment up to US$675 million. The sum equals around ten percent of
the five billion Euros Cypriot authorities now need to collect from
budget cuts and bank customers on the island, to save Cyprus from
financial collapse."

Fredriksen's close collaborator has denied that Fredriksen received the proceeds.
But given all we know about the slipperiness of offshore structures,
it's quite possible that those words are quite true in technical legal
terms (or perhaps in an uncertain area of tax legality) but not at all
true in genuine economic terms. (It should also be noted that Fredriksen
has two daughters who may be beneficiaries of his fortune.)

Could the Cypriot tax authorities collect this money? The trouble is:
Cyprus has made its living by not enforcing its own (as well as other
countries') laws, as far as rich foreigners are concerned: it is a
captured state (as outlined in detail here).

And the Cypriot authorities appear to have already signed off on this deal.

Oh well. Still, hard-pressed Cypriot taxpayers ought to be asking some hard questions of their own tax authorities about this.

Tax havens in trouble: Liechtenstein

On the subject of tax havens in trouble, this recently, from Liechtenstein, seems to have got relatively little attention:

"The prince warned that forecasts for 2013 show a deficit of 172 million Euros which represents nearly a quarter of spending."

Phew! And this follows a limited clean-up in Liechtenstein following a whistleblower-led scandal in 2008 which saw, as The Economist reports:

"Liechtenstein banks’ client assets declined by almost 30% in the five years to 2011, to SFr110 billion ($118 billion)."

The new pressure on European tax havens will make it still harder for
Liechtenstein on secrecy. Liechtenstein's Prime Minister Adrian Hasler told Swiss TV yesterday that
in the context of all the changes happening in Europe they were
considering something that had previously rejected outright: automatic
information exchange.

"The financial centre knows that things may go in that direction," he
said. This would presumably put a big dent in Liechtenstein's business.
They know, too, that a steamroller is coming: amendments to the EU
Savings Tax Directive. I expect that this will hit Liechtenstein
foundations and other structures - and state revenues - pretty hard.

This tiny, weird little principality, another quintesssentially
'captured state', has now outlined a strategy, described in that
Economist article (which is quite interesting in its own right,) to
shift the emphasis away from facilitating individual tax abuses towards
more aggressively selling corporate tax abuses, based on signing 'as
many tax treaties as possible."

Nobody should sign a double tax treaty with Liechtenstein, for reasons outlined here (India) and here
(Germany.) Let's hope the world's tax authorities are awake to these
dangers. If so, it will get harder for that little Alpine centre of
criminal money.

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The Tax Justice Network (TJN) is an international, non-aligned network of researchers and activists with a shared concern about the harmful impacts of tax avoidance, tax competition and tax havens.
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